Papers brace for continued torpor in '03

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[Seattle] As newspaper executives gathered here last week for the Newspaper Association of America's annual conference, they expressed relief the war in Iraq was over mixed with renewed economic concerns.

Attendance rose significantly from last year's 734, according to the NAA's count of around 900 attendees this year, but such signs of sanguinity were not universal.

"The war set us back. There is uncertainty," said P. Anthony Ridder, chairman-CEO of Knight Ridder and the incoming NAA chairman, who said the outlook is now "a little slower than I expected" in early '03.

Some put matters more mordantly. "I was talking with some people about how everyone had budgeted for a turnaround in the second half of 2003-like everyone had for 2002," said Chris Anderson, publisher of the Orange County Register, who noted no such turnaround seems likely but that "one of these years we're bound to get it right."

pickup in retail ads

Executives spoke of seeing signs of a pickup in retail advertising after the war had depressed it, but help-wanted advertising-the largest component of classified advertising and still newspapers' biggest revenue stream-remained a trouble spot. (That no publishers claimed to know how much the likes of online competitors have siphoned away testifies either to poor visibility or to industry-wide denial.)

A conference highlight was the address by the chairman of the Federal Communications Committee, Michael Powell. The FCC has a June 2 deadline to issue new rules on regulations that currently prohibit newspapers from owning radio or TV stations in the same market. Chairman Powell told publishers it's "difficult to maintain the rule in its current form," and that the assumption that the public interest was best served by regulating against concentrated media ownership "is simply false."

Gary Watson, president of Gannett Corp.'s newspaper division-a company standing to benefit significantly from relaxed regulation-said "when [Powell] is that firm in front of this audience, it can't be bad news."

But there are signs of increased resistance to these regulations within the Senate and the Commerce Committee that oversees the FCC, which may account for the cautious notes struck by Gannett Chairman-CEO Douglas McCorkindale, who said he would "wait and see what happens. I've been around [the FCC] for 28 years."

That newspapers big and small want the rule done away with was evidenced by a question from Gregg Jones, who publishes Tennessee's Greeneville Sun. Mr. Jones contended cross-ownership regulations economically disadvantaged independent owners by not allowing them to consolidate cross-media holdings in their markets. Were they allowed to, he said, more papers may have remained under local control. (Mr. Powell reacted favorably to Mr. Brown's assertion.)

`bogus argument'

But others disagreed. Frank Blethen, publisher of the Seattle Times, called it "a bogus argument," and pointed out that "a halfway decent operator" of a local newspaper managed minimum profit margins of 12% to 20%. Gary Pruitt, chairman-CEO of McClatchy Co., which owns the Minneapolis Star Tribune and 21 other newspapers, said his company was "skeptical" local newspaper-TV combinations could work, given scale needed to bargain with networks and attract management and programming. (Read more from Chairman Powell's speech at QwikFIND aao63s).

The conference played out against the backdrop of the local joint-operating agreement governing The Seattle Times and Hearst Corp.'s Seattle Post-Intelligencer breaking down in dramatic fashion. The Seattle Times on April 29 formally notified Hearst it would act on a provision to dissolve the pact on the grounds that the Times has been unprofitable for three consecutive years. Hearst pre-emptively filed suit in a King County Superior Court on April 28, saying extraordinary circumstances had caused those losses. Throughout the conference, executives at Hearst and the Times and its minority partner Knight Ridder declined to comment, although Mr. Blethen at one point told a reporter "we have been more than willing to restructure the JOA, as long as the profit split" allows his company "to get out from under" recent losses. (Read more on the Seattle breakup at QwikFIND aao63o).

Another popular topic in the halls was the coming sale of Freedom Communications, which publishes the 360,000-circulation Orange County Register and 27 other dailies. The Register's Mr. Anderson declined to comment on any sale-related matters, but one executive familiar with the matter said a prospectus was expected to come out in mid-May, with initial bids due in June and a final result coming in the fall. Observers expect the deal price to exceed $1 billion; potential contenders include Gannett Corp., MediaNews Group and McClatchy Co.

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